Puerto Rico’s Debt Prompts Rallies From NYC to Florida

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A for sale sign is seen hanging from a balcony next to a Puerto Rican flag in Old San Juan as the island's residents deal with the government's $72 billion debt on July 1, 2015 in San Juan, Puerto Rico.

Photo by Joe Raedle/Getty Images

Demonstrators in New York, Washington and Orlando, Florida, called on the U.S. government to help struggling Puerto Rico cope with a failing economy and $72 billion in debt.

In New York City, home to more than 700,000 Puerto Ricans, the largest concentration outside the island itself, Mayor Bill de Blasio joined other elected officials and labor leaders on the steps of City Hall to blame investors and federal policies for creating the commonwealth’s problems.

“It is very disheartening that the U.S. government is turning a blind eye toward the grave situation in Puerto Rico,” said City Council Speaker Melissa Mark-Viverito, 46, a Democrat from East Harlem who was born and raised in San Juan. Hedge funds, she said, “are vultures, are feeding off the misery of the island and the people, and it’s really dire.”

Junk-rated Puerto Rico and its agencies have racked up more debt than any state except California and New York as the government borrowed to paper over budget deficits. Last month, Governor Alejandro Garcia Padilla said the commonwealth couldn’t pay all of its obligations. His administration will draft a debt-restructuring plan by Sept. 1.

Hedge funds and other distressed-debt buyers hold almost a third of the island’s securities, according to Barclays Capital. Those firms have been purchasing Puerto Rico bonds for about two years as the debt’s value sank and traditional municipal-debt investors decreased their exposure. Debt on the island is tax-free nationwide and offers yields higher than comparable investments.

Shrinking Economy

Puerto Rico’s economy has struggled to grow since 2006. Its population has shrunk by 7 percent in the past decade as residents look for work on the U.S. mainland. Its 12.6 percent June unemployment rate is more than double the national average.

The path out of the crisis, de Blasio said, lies in the U.S. Creditors should relax the debt-repayment schedule and the federal goverment should allow Puerto Rican agencies to file for bankruptcy protection, he said.

The government should also help companies and individuals invest in the island of 3.5 million people. The Jones Act, a federal law with costly shipping restrictions, should be amended to exempt Puerto Rico, he said.

“They are saddled with a debt they cannot pay,” de Blasio said. “They are at the mercy of their creditors.”

In Washington, Democratic Representatives Jose Serrano and Nydia Velazquez of New York called for Congress to permit commonwealth agencies to file for bankruptcy at an event Tuesday. As the crisis deepens, “Wall Street will eventually feel it,” Serrano said.

The events organized by the National Hispanic Leadership Agenda, a coalition of 39 Latino organizations, also included a rally in Orlando.

(Corrects Puerto Rican population of New York City in second paragraph of story published July 28.)
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